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Original poster

Using child’s inheritance to get on property ladder

530 replies

Wanttobeontheladder · 11/06/2019 12:22

We are in our late 30’s with 3 children and have been renting all our adult lives

We are desperate to get on the property ladder but I am SAHP and DH is sole earner.

After the loss of a parent recently there is a considerable inheritance that was left directly between our children rather than coming to us.

Using this money would mean we could finally get on the property ladder (just)

Seeing as the children benefit too we feel that we should use it.

Would we be unreasonable to consider this?

OP posts:
Treefloof · 12/06/2019 15:11

I can't believe all these people screaming that you are 'stealing their money !!

The money left in the will to the children. In the usual scheme of things things in law it's called stealing.
If the children had been left half a mil and parents wanted 25k to put to a house purchase I could see a valid point. As it is the parents want to use the whole 25k, nothing left over.
So what if they divorce? They each take half any equity to start again is usual, no way/less way to save back this inheritance.
What if mother dies and father remarries? Or vice versa, what happens to the house on another divorce or death? Where is the childrens money? What if house prices crash or stagnate? Money tied up in a house that's worth less than when bought.
A parent becomes disabled, adaptations need to be made to continue living in this house, whereas the money for it, when children reach majority and want the money, its tied up in a adapted house that the parents cant remortgage because ones disabled and one is looking after the other, no one has a job.
What if the house gets repossessed.
This will not end well, these are just a few scenarios. Life is unpredictable and if you can imagine it, it can happen. Any one of these things could happen and deprive the children of their rightful inheritance.

LoafofSellotape · 12/06/2019 15:13

I can't believe all these people screaming that you are 'stealing their money !! It's not like you are planning on popping down the bookies and putting it all on 'wonkey donkey' to come home first .! You are planning to provide them with a stable home where you are not at the pray of a landlord deciding he wants his house back. Not to mention that instead of paying the landlords mortgage you will be investing for your family

I complete agree.

There's nothing MN likes more than an inheritance thread or a stealing thread and this is the best of both,of course there's screaming WinkGrin

Shequakes · 12/06/2019 16:15

Totally missing the point.

Firstly op has said they will never know about the money unless she tells them. So not above board.

Secondly assuming you will make your money back in 10 -15 years (like the seemingly distraught pp, whose 'mate's did this) or increase the money is ridiculous. Property goes up over time, in monger periods. No guarantee it will in 15 years.

And that not the only risk
As pp have been saying, what if the dh loses his job. Or gets ill and cant work. Or they divorce and sell the home and end up in rented anyway as neither can afford to buy.

Buying a house is risky. But you risk your own money. And its not the late 90s or early 00s. House prices arent rocketing and a return cant be guaranteed on the next 10-15 years

Shequakes · 12/06/2019 16:18

Oh and the you have no guarantee that the parents will be able to sell or get a remortgage. Or get a smaller mortgage to downsize.

So the kids are left with either forcing the sale and their parents going into rented or just accepting their parents spent their inheritance and they wont see it until their parents die. Maybe not at all if one or both needs care.

That's a lovely situation for the kids to be in.

katewhinesalot · 12/06/2019 16:35

So whats the alternative? Let it sit in a bank accruing diddly squat interest? A financial advisor might suggest investing it in stocks and shares to maximise returns.

Well what happens if the stock market crashes? It's risky. Investing it in a house for the kids benefit is no more risky than investing it in stocks and shares and they get to benefit from this money now in secure housing. As long as the deal is financially transparent for when they are older I think it's a great deal for both the parents and the kids.

And no I wouldn't let on whilst they are young that they have money in the house, but then I wouldn't however it was invested. Kids need to grow up with a work ethic - not thinking that they've got money already to rely on.

Attache · 12/06/2019 16:38

Has OP been back at all? Hmm...

I am a bit bamboozled by people saying it's risk free. Absolutely zero risk of parents not being able to get a mortgage in 15 years, or not being able to save £25k in the future when the whole problem is they can't save £25k now, or just choosing not to sell the family home when the eldest wants money for uni and the younger ones are mid GCSEs and A levels... However good your intentions, these simply aren't zero risks.

Contraceptionismyfriend · 12/06/2019 16:42

@katewhinesalot yes. It doesn't need to do anything. It's a substantial amount of money. It's should be safe for the intended recipients to do with when they wish.

If OP and her DH want more than they can afford they can take their own crazy risks. Like the Op getting a job.

Shequakes · 12/06/2019 16:45

katewhinesalot theres lots of options that mean the money is available to them when they turn 18 or what ever age.

A kid knowing there will be 8k for them at some point is not going to damage their work ethic. It's not a million pounds for gods sake. The OP has seriously thought about never telling them at all. Its clear the ops husband see that money as his. And the OP is heading that way of thinking too.

Using it to but the parents house is risky. No guarantee of a return or even getting the money back. For lots of reasons. Whats worse it could cause a rift between the parents and children, especially if they cant replace the money.

RB68 · 12/06/2019 16:48

The money should be held in trust on behalf of the kids with executors to govern the use of the funds. There is nothing to say that investing it in property is a bad idea, however the parents should pay rent or interest on that amount into the trust - it would be a valid investment and should be down to executors to decide. If it is invested in the property then it should be recognised as such and documented.

Further the parents should make the money available for anything the child requires at some later stage so for e.g. college or a business start up or just for a deposit on a house for a child. This is where parents may come unstuck.

Fundamentally I think you need to find an executor for a bare trust on behalf of your kids. I personally wouldn't risk it in a house AT THE MOMENT many are losing value and with this as the only deposit it is at risk of being lost if property needs to be sold as Mortgage would have first call. As an executor I wouldn't allow this.

User8888888 · 13/06/2019 14:37

“Well what happens if the stock market crashes? It's risky. Investing it in a house for the kids benefit is no more risky than investing it in stocks and shares and they get to benefit from this money now in secure housing. As long as the deal is financially transparent for when they are older I think it's a great deal for both the parents and the kids.”

It’s a moot point here as the OP doesn’t seem to want to protect the money, merely use it herself. Even if she did want to protect it, I’d argue the opposite to the point above. This isn’t a straight financial transaction v financial transaction. Having the money tied up in a parent’s property is likely to be much more complicated. As others have said, will the house realistically be sold when the first child hits 18? Probably not. This is not an investment we’re talking about- it is the family home with all the emotional baggage that will come with that. Will the children be paying the stamp duty, fees, moving costs as well?If so, say goodbye to a good chunk of the money immediately.

A well diversified portfolio of stocks and shares (which could include property funds) is likely to be more straightforward and accessible at 18 which is the legal responsibility of the trustees.

ISpeakJive · 13/06/2019 14:46

What would happen if your marriage breaks down, OP? What will happen if you and DH divorce? What would happen to the house?

FizzBuzzBangWoof · 13/06/2019 14:56

YABVU

The deceased relative who left the money was I'm sure well aware that a £25K inheritance would help you get on the property ladder but rightly or wrongly they chose to leave this money to their grandchildren instead

You can't just ignore the will and spend the money yourselves that is outrageous!

SunshineCake · 13/06/2019 15:07

I have been fanatical about every penny my children have been given is put in their accounts since 98% of money I was given as a child was taken by my foster carer. Three times a year I was given a couple of pounds by my mothers friends, not by my mother ever, so I was able to have lunch at school three times a year.

Deadposhtory · 13/06/2019 15:11

I did. I used about 70% of kids money. No regrets and eldest is almost an adult and understands why. After all the kids will get it back one day....

FizzBuzzBangWoof · 13/06/2019 15:17

Deadposhtory - when will your DC get it back? Are you planning to downsize once DC are all adults to release their inheritance or will they have to wait til you die?

ELM8 · 13/06/2019 15:37

Would all the complications that come with "borrowing" £25k really make this worth it?

You have nearly double that saved - I'm struggling to understand how that's not enough for a deposit on your own house if it's well over 10% of the value of even the most expensive house you mentioned?

QueenofPain · 13/06/2019 15:43

Don’t spend your kids money. The kids are no better off with you paying a mortgage rather than renting provided they have a roof over their heads. You will benefit, for the kids nothing changes.

Shequakes · 13/06/2019 15:59

No regrets and eldest is almost an adult and understands why. After all the kids will get it back one day...

No guarantee of that.

I wonder if all your children will understand or will remain understanding when they are in a position that they could use the money. But cant have it until their parents die.

The money is theirs to have. Not to have when their parents die, if there is anything left.

MissConductUS · 13/06/2019 17:07

No regrets and eldest is almost an adult and understands why. After all the kids will get it back one day...

If it wasn't used for their direct benefit will you pay interest for the 50-60 years they lost the use of the money?

Namechangeishard · 13/06/2019 17:11

No regrets and eldest is almost an adult and understands why. After all the kids will get it back one day...

So in 7 or whatever years when an adult and in a relationship wanting to buy their own home are you going to be able to immediately hand the cash over?

justanswerthephone · 13/06/2019 17:28

I did. I used about 70% of kids money. No regrets and eldest is almost an adult and understands why. After all the kids will get it back one day....

Brainwashed are they?

TheRedBarrows · 13/06/2019 18:07

“The kids are no better off with you paying a mortgage rather than renting provided they have a roof over their heads. You will benefit, for the kids nothing changes.”

That’s not true.

If paying rent is swapped for a mortgage the kids will inherit a house.

But: their investment needs ring fencing and the debt to them or their part ownership of the house legally recognised.

Shequakes · 13/06/2019 18:19

And why is it that the kids have to wait for their parents die before getting the loney that is legally theirs?

Shequakes · 13/06/2019 18:19

*money

TheRedBarrows · 13/06/2019 18:41

“And why is it that the kids have to wait for their parents die before getting the loney that is legally theirs?”

Who says they have to wait to die?

Rents can be higher than a mortgage and life will get easier when childcare reduces and the parents get future promotion.

The parents can save to repay the kids, take equity out of the house, or sell and downsize to repay the kids. (Giving the kids a pro rats share in the increase in price).

I made good money for my Dc, putting it into a house then reading it with the % increase in value when we moved from an experienced dive area to a cheaper area.